Building the Innovation DNA

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I believe we are arriving at the point of real value by organizing dedicated innovation scientists and engineers into a specialised innovation unit. Innovation has emerged into part science, part art and design, and plenty of engineering (social and process). Today to successfully manage innovation is getting increasingly challenging and placing considerable strain on the present design and structures of organizations. A dedicated unit or group that draws from a range of disciplines and combines these into a new organization unit has significant value to be at the forefront of designing the organizational change needed for innovation to be more embedded and integrated.

Let me explain why?

IBM have been investigating and promoting the concept of SSME- Services, Sciences, Management & Engineering for some time. I recalled a presentation by Jim Spohner of the Almaden Service Research from 2006 that has significant relevance even more today. As most are very aware, IBM have shifted dramatically into a service organization and innovation is absolutely essential.

To quote from Henry Chesbrough with his opening remarks in his latest book “Open Service Innovation”: “A few years ago, I sat in Paul Horn’s office at IBM. Paul was the Senior Vice President of Research, in charge of IBM’s 3,000 researchers, scientists and engineers. We had a wonderful conversation about innovation, and the many successes IBM had obtained from its research activities. At the end of our time, I asked him a final question: what is your biggest problem today? His biggest problem was that his research activities were geared to support a company that made computer products: systems, servers, mainframes, and software. But most of IBM’s revenues were coming from services, not from its products. “I can’t sustain a significant research activity at IBM if our research is not relevant to more than half of the company’s revenues going forward”, he stated. His answer intrigued and stimulated me to start working on an academic area that has become known as “Service Science”

I believe both IBM’s & Henry Chesbrough’s focus is absolutely right, to focus upon service, but I would argue much of that thinking also applies across all of an organizations innovation activity. I believe we are at a point of time where we need to create dedicated Innovation Scientists & Engineers that focus upon the discipline of innovation and build this into a centre of excellence within the organization.

Drawing from this work of IBM and applying it to the broader application of innovation let me outline the profile, skills and what these specialist units can accomplish.

First we need to agree that there is this need for a ‘call to action’

Every organization is working through their view of innovation, it seemingly is complex, the issue is that innovation will all of the best efforts still remains ‘ad hoc’ and not recognised as an emerging discipline. It needs to become an established academic discipline, it needs to combine different methods and turn these into the ‘science of innovation’. We need to become more systematic about innovation. It needs a new type of speciality, a different mindset to tackle the broad issues surrounding innovation.

Establishing and combining these science and engineer innovators

Innovation is a huge field of research. It needs understanding of its design, its systems and how these can be scale-emergent. We need more predictability in a whole raft of areas relating to innovation activity: in quality, compliance, productivity, sustainability and in improving success rates for innovation activity. We need to turn more ‘promise’ into economic value in our innovation activity. It needs dedicated, specialists that ‘grasp’ the different aspects of innovation and successfully translate them.

This dedicated team or person delivers real value

Through their own specialized understanding they create knowledge others can use and quickly translate

Through their science application they create this knowledge

Through their engineering they can show the way to apply this to create new value

Through their management understanding they demonstrate the improvement of the process of creating and capturing value for the organizational good.

So having a dedicated innovation scientific emphasis can create knowledge, the engineerial aspects can show ways to employ the knowledge, with the understanding of business models and how the different aspects can capture the potential value and finally how specific innovation management can improve the process, climate and environment to deliver innovation.

It is the ability to combine these as a dedicated unit or group of people can rapidly accelerate and embed innovation within organizations

What are the disciplines required to be mastered?

There is a real need to blend the exciting areas emerging from social sciences, drawing from the many disciplines of engineering schools and schools of science (operations, computer sciences, industrial design & system engineering) and finally the school of management (marketing, accounting, management of technology, operations and customers found from MBA programmes) and a fair level of working experience and exposure across organizational problems and present disciplines.

The skill-set required will be incredibly valued by being ‘pooled’ together.

A huge blend needs to be within the mix: the combination of technology, business and social- organizational. The team needs to be able to use tools that are more empirical (simulation work, investigative, experience applicable), analytical tools and techniques, engineering (workbench application, prototyping, assembly understanding, infrastructure deployment), theoretical (academic savvy, knowing standards and principles), scienced based and design applicatable.

The principle role of this dedicated innovation group

They ‘own’ the body of knowledge, they seek consistent improvements, they perceive and evaluate emerging opportunities and they often identify unique avenues.

Where do they get involved?

This specialised unit or group works across the whole organization and its stakeholders for innovation; they don’t necessarily manage it, other more highly focused disciplines do (research, operations, supply chain, marketing, customer services) but they ‘orchestrate’ it, for the economies of co-ordination this can bring in improvements in creating and capturing innovation value that translates into new economic and commercial success.

1. Firstly they are judged by their ability to relate & transform. Today, we have growing co-production relationship need of working both with internal and external parties (e.g open innovation). This growing need has to be translated increasingly into the goals, rewards, risks and work, both explicitly and tacitly, to be captured between the parties so as to manage the ongoing state and efforts needed. This task is increasingly falling to newly forming dedicated ‘relationship’ groups but I would argue that there is a need going well beyond this current structure seen today, as concepts do need to have both the strategic and tactical implications well understood beyond many of these current open exchanges today are generating. It calls not just for a senior manager to have the oversight but a broader strategic team capable of broader innovation assessments and understanding of the strategic and tactical implications. It is this teams ability to be the central point for co-production as overseer’s of the core process of innovation and fostering it.

2. Supporting the Front stage activities: Variance at the front stage is largely due to often consistent changes to requests and misunderstandings, resulting in actions that can step well outside a specific brief. More importantly they can miss or simply ignore different opportunities as they were not in the initial brief. Spotting these different opportunities can be discovered and then linked into the organizations broader strategic intent by a dedicated unit, and through this, can provide even more higher value services or concepts. Eliminating front stage variance can lead to improving standards and higher quality, better and faster time to market but it can also ignore or destroy a lot of high end value creation opportunities by lacking this broader insight and deeper organisation understanding. This needs greater balance and dedication that this specialised unit could bring. It becomes a strategic innovation unit (SIU).

3. Contributing to Back stage activities: These presently involve less the external stakeholders but more how the internal process of innovation works within organisations. The speed, time to market and engagement of all involved in any innovation process determines ideas moving through to successful implementation. Making innovation more visible comes in many forms. This could be working with different levels of management to provide them improvements in tools, techniques and raise its meaning. It could mean exploring the impact points within the innovation value chain and often the knock on effects, it could mean managing portfolio aspects, investigating execution value (what works, what doesn’t), evaluating redundancy and legacy issues within the innovation process, providing innovation assessments, anchoring innovation thinking into institutional change, and moving custom processes into standard ones that become more sustainable.

4. Delivering the complementary aspects of Service, Product & the Business Model: as products and services have the potential to be combined in unique ways to increase the value for organizations; these are often having increasing tension on the present business model. These ‘tensions’ need to be evaluated and organizations increasingly re-designed to seize the different opportunities that come from new combinations. This requires a fairly detailed understanding of the effects on the system and what needs changing, spinning out or altering.

5. Orchestration: they have the express intent to manage the total innovation platform in co-producing the value and extracting the different contributions from suppliers and customers alike and achieving the economies of this dedicated co-ordination. The intensity of innovation will continue to increase, it needs dedicated managing to provide a more holistic assessment of its impact, effect and dynamics upon both the organization and the market it operates within to clarify the economic value in different terms. They orchestrate the innovation business platform.

6. Improve dynamic evolution: Understand the dynamics of innovation, their interrelationships and the gap points that need resolving to deliver successful innovation. I’ve written on this previously under dynamic capabilities and innovation landscapes (see http://bit.ly/bxTeYO).

7. Improve the capabilities of people and organizations: so the ability to add higher value creation and capture changes to reconfigure and improve productive capacity to contribute to innovation activity. I’ve written about a number of areas on this already ( http://bit.ly/c3G0Ta) or ( http://bit.ly/bLxGdt) & ( http://bit.ly/ibeT6D) to not go into this further here.

Innovation is certainly becoming more intense

Innovation is becoming more intense; in activities, knowledge, organizations, networks of partners, relationships with multiple external partners and customers. It is becoming more demand-sided that require different approaches than those traditionally from the past. We do need a greater dedicated focus to manage this. It needs to be more systematic, more organized so it can draw upon an increasing set of disciplines (old and new) with the aim of integrating them into a new specialty of innovation science and engineering.

There is this powerful need to combine innovation in science, engineering and management. We are increasingly dependent on the successful outcome of our innovation activity: to evolve, interact, coordinate, specialize and value co-produce. We need to recognize we do not have the dedicated, combined structure yet in place to meet the innovation challenges not only of today but rapidly coming towards us in the future. Perhaps it’s time has come?

Recently I was going through my files and was amazed how the use of ‘seven’ came up to form some sort of magic ‘seven’ framework. I’m not sure if we can blame this all on the “seven wonders of the world” but ‘seven’ has some magic perhaps when it also comes to listing. Is it because our attention span can’t absorb more than seven things at a time? Ok, I can hear my wife say “Seven, you, huh!”

Let me give you a flavour of this use of ‘seven’

Seven keys to designing your innovation

Seven success factors

Seven habits of effective people

Seven innovation myths

Seven kinds of consequences

Seven deadly sins of Roadmapping

Seven levels of sustainability

3M’s seven pillars for innovation

The list could go on….and on. So why does seven seemingly loom so large for us?

My favourite seven was the McKinsey Seven S framework.

I loved that. I wrote my Innovation Masters dissertation using this for my research framework, based on Strategy, Structure, Systems, Skills, Staff, Shared Beliefs & Style. It simply worked. The premise of the model is that all seven factors are interdependent and attention has to be given to all of them, with each factors relevant importance changing over time and all are important for innovation, they connected innovation for me.

So what was behind the seven factors?

Strategy: The set of actions that you start with and must maintain

Structure: How people and tasks/ work are organised, the authority, and mechanisms

Systems: The process and flows that link organisation together

Style: How managers behave, “the way things are done around here”, the ‘norms’ that are followed

Staff: How people are developed currently and in the future to build their competences

Skills: The dominant capabilities that exist (reside) within the organisation

Shared Beliefs or Super ordinate goals: The longer term vision and values that can shape the organisations beliefs and are widely shared as important and give that broader ‘sense of purpose’.

The downsides on its use

Its ‘analytical simplicity’ did limit its capacity to go sufficiently below the surface to understand all the complexities that make up culture or structure, to understand innovation. It group complex issues under general headings “Staff, Skills, Style, Systems etc.” which can mean very different things to different people, at different levels within the organisation. It also offered a more internal perspective.

The 7S advantages or upside in its use

Although the seven factors are all interdependent, contradictions and tensions can make organisations somewhat more adaptive and by reviewing these 7 factors constantly may help make a quicker adjustment to meet the changing business circumstances. Knowing where to place the emphasis and how the factors all interrelate gives the model the power to manage these tensions. As an analytical tool it does help gauge where an organisation “is” and in the case of innovation can highlight where it compares with other companies based on the same set of structured questions. This does enable a quick identification of the present innovation, for me established what conditions are or were in place, and indicated what needed to be given new or different priorities to improve the innovation culture.

The 7S framework’s origins and approach

The 7S framework first appeared in the “Art of Japanese Management” by Richard Pascale and Anthony Athos in 1981. At this time, Tom Peters and Robert Waterman were equally exploring what made a company excellent. The Seven S model was born at a series of meetings between these four authors in 1978. It went on to appear in Peters and Waterman’s book “In Search of Excellence” (1982) and then was taken up as a basic analytical tool by the global management-consulting firm of McKinsey and is referred to as the McKinsey’s 7S model.

Times change but these ‘classic’ frameworks seem to live on?

Recently I saw in Professor Chesbrough’s latest book the continued use (or reference) to Michael Porter’s Value Chain, and still seemingly dominate the mindset of many executive even today, yet it was created in 1985. He thankfully questions this. Do we still use this today? Equally Porters classic 5 Forces for Competitive Analysis seems so outdated also in today’s world. We really do need to rethink and conceptualize with frameworks more reflective of today. I do feel it is time we ‘consign’ many of these classics.

So it got me thinking, can I let go of my McKinsey Seven S. I mean it was thought of between four authors 33 years ago- wow! Time to freshen it up or simply move on and reflect more of the issues we are seemingly facing in this global, connected world.

So, my new Seven S is born!

We are in a more connected world, we need to be more outwardly facing so my Seven S reflects this hopefully. It tackles the issues of the day perhaps? These are Sustainable, Systemic, Social, Scale, Scope, Salient and Synchronized.

So what lies behind these seven?

Sustainable: Sustainability is the capacity to endure. From the innovation perspective sustainability is the potential for long-term maintenance of our well being to grow, to thrive, to provide return and has environmental, economic, and social dimensions.

Systemic: This refers to something that is spread throughout, the whole system-wide innovation activity we do, affecting a group or system such as our organization, our network or the market or society as a whole.

Social: the term “social” is used in many different senses and regarded still as a fuzzy concept meaning different things to different people. What it does have as a common thread is it refers to the need for interaction, recognising the broader collective co-existence and the future way for inclusion, cohesion and collaboration.

Scale: I’m dealing here more with the economics, the exploiting inside and outside we need to do so much more frequently to survive and thrive. Open Innovation is one example of this scale need, through pursuing openness to further ‘scale’. We seek to ‘gain scale’, we organize our structures and processes around the potential of scale to handle greater volume and gain utilization. Infrastructure is a classic candidate for ‘scaling’ to spread costs. We need to scale our knowledge and its accumulation for example. When we expand we need to ‘scale’. We exploit through scale; in global markets and across multiple connections and increasing networks to benefit from this.

Scope: We often fail to define scope. Scope partly determines attraction. The more we ‘scope’ the greater the potential we have to offer to others to join with us. It allows for variety, it allows for exchange, it allows you to build based on your single source of an idea for example. Providing platforms for others to work from, opening up software allows for greater scope for others to contribute. The more attractive, the potential becomes for economies of scope to prevail. We gain potential synergies from the more we scope.

Salient: Here it is referred to as its relevance, how it stands out, is a conspicuous part of the thinking. Something that is noticeable and significant to understand or focus upon. This is getting ‘it ‘into focus, as a new theory, as the outstanding feature or prominent in our (strategic) thinking, the salient message.

Synchronized: to occur in parallel, at the same time, simultaneous. It is for instance, the bringing together of strategy, innovation, structures and systems so as to synchronize for effective and efficient performance, operating in unison allowing the coordination of events, the ‘being in sync’.

The question remains

Does my attempt to update the McKinsey Seven S with a more modern, outwardly looking group of seven make sense for evaluating innovation? Can it be used to diagnose organizations to see how innovative they are, how they compare?

It still has many contradictions and tensions within the seven factors but so does innovation itself. The seven chosen allow for more rapid and changing business conditions to validate relevance. Knowing where to place the emphasis and its use as an analytical tool it help gauge where an organization “is” on its innovation activity does also allow for comparison with others.

Absorbing the different messages coming out of Professor Henry Chesbrough’s new book has been interesting. The book “Open Services Innovation: Rethinking your business to grow and compete in a new era”, published by Jossey-Bass was just launched in January 2011.

The book can go the way of a lightning rod to bringing service innovation up in many people’s thinking both in academic research and corporate agendas. Professor Chesbrough is absolutely right, services are critical to developed countries economies and within our organizations. It is time to move service innovation up in our thinking by combining the internal capabilities within organizations and by enlisting the efforts of many others in support of their business. The challenge is to combine the customer and the supplier on the same platform for Open Services Innovation to work. It is thinking through platforms more that catches my interest and what this means in generating new, innovative business models.

Taking services into a more open approach is not so easy.

Service innovation is distinctly different. Just take the opportunity to read “Service Innovation” by Lance A Bettencourt, published by McGraw Hill to get a really detailed understanding of this or read my book review I provided to InnovationManagement.se (http://bit.ly/9mCXmO).

Chesbrough’s book has four foundation steps. You can see these in my last blog “Taking the Open Services Innovation Road (http://bit.ly/h5mbAV). The two aspects that I felt were worth focusing upon here are 1) transforming and redesigning your business model and 2) the suggestion of an open innovation business model platform to work from.

Transforming your Business model

The chapter that deals with these two aspects (chapter 5) opens with “while openness can be quite helpful to improve service innovation, it becomes far more powerful when joined to the task of designing or redesigning a business model.” This is the pivotal chapter for me.

For me business model generation is very much something we all have to build into our thinking. I’ve blogged on different occasions about this in many of my September & October 2010 posts on this site- I encourage you to take a look back to refresh on these if needed.

Opening up organizations thinking to focus more on service innovation will certainly challenge existing business model design. Distribution channels, interactions with customers will dramatically alter; extracting more out of the value chain, deepening after sale service will all need to be reviewed. Professor Chesbrough does suggest many current business models are full of inertia by their very logic as one choice can constrain other alternatives and cites Dell as a good example of this.

Also I would recommend Alexander Osterwalders excellent book on Business Model Generation, my review (http://bit.ly/i6W3HV) or Mark Johnson’s “Seizing the White space”, review here (http://bit.ly/bwKNkS) for gaining really good understanding of Business model needs as Professor Chesbrough’s book touches on the Business model as you do need to supplement this chapter significantly.

Open Innovation Business Model Platform

“The ultimate goal for a service business is to become a platform for other businesses to build upon”

According to Professor Chesbrough “the crowning achievement of a platform business model is that it attracts external companies to invest in business activities that enhance the value of your platform. Stated differently, a platform business model leverages other people’s money and resources at it grows”

Now this gets to the interesting part of the book for me. Professor Chesbrough suggests a two-sided market platform between suppliers and customers both contributing into the ‘hosted’ platform numerous choices for customers to chose from and lots of customers looking for items to choose to form a virtuous cycle. It is the architecture, the platform developer who connects the internal and external elements to achieve this.

In this open platform business model where key suppliers and customers enter into a ‘relationship’ and become business partners to share technical and business risk with customer need and experience understanding. Getting to this sense of spiritual ‘Nevada’ is the really big ‘bite’ from this book.

“This requires opening up your organization’s business model to harness the energy and investment of third parties in the business”

The book does broaden the business model still further and suggests third parties be encouraged to participate in the company’s future business plans with even independent evaluators to rate and review services on this sharing platform. By sharing tools, standards, intellectual property and know-how needed is part of the open equation, the platform not only coordinates business directions it now shapes future direction alongside the customer.

Extending what is presently going on and applying it across industries is the challenge.

This platform approach is nothing new for many business-to-business activities that have technology as central, and or, have long lead times and require industry standardisation where they need to build out on agreed platforms or through a roadmap approach. Also for selected industries that have achieved this greater connection with suppliers and customers such as Apple (well covered in the book) for its iPod, iTunes, iPhone & iPad where applications are open and customers participate but can this go more broadly across other industries might be more fraught and questionable?

Can the combination of fresh thinking of your business as more a service business, allowing co-creation with customers getting more involved through opening up innovation to a broader ecosystem based on platform business models be our next big ‘wave’ in innovation?

It will be interesting to participate in the debate and see if it gains a broader acceptance. I feel we might have a long road to travel though, to tackle this conceptual framework suggested by Professor Chesbrough and resolve the many issues and challenges it tends to ‘brush over’.

I have been looking forward to this book; it addresses one of the most important areas of innovation that we have, the service sector. In this last week I have been reading Professor Henry Chesbrough’s new book “Open Services Innovation: Rethinking your business to grow and compete in a new era”, published by Jossey-Bass, released last week on 18th January.

Services are critical to understand and focus upon, for our continued economic growth, for the ability to offer often distinct and unique competitive advantage, as well as provide much of our future employment opportunities, especially crucial in the Western economies. Services today comprise roughly 80% of economic activity in the United States, and 60% of economic activity in the top forty economies of the world (source OECD).

Mixed Emotions

After reading this book a couple of times I must admit I had a set of very mixed emotions. His argument and business case for services is certainly compelling. He outlines a four key conceptual framework which can serve as a broad roadmap in thinking how to tackle services in a more open way but, and it is a big but he leaves an awful lot of ‘open’ questions to fill in and this is where the book disappoints.

His four foundational concepts that drive his framework

The four foundational concepts are bold and certainly radical in their strategic implications, although on first glance they may not seem that way.

Think of your business as an open services business in order to create and sustain differentiation in a commodity trap world

Invite customers to co-create innovation to generate (new) experiences they will value and reward

Use open innovation to help you turn your business into a platform for others to build on.

Transform your business model with Open Services Innovation to profit from building a platform business model so you can gain from others’ innovation activities as well.

The escape from the commodity trap is one of his biggest arguments for change

He talks a lot about escaping the commodity trap. I’m not sure I buy this argument yet. I feel too many organization don’t differentiate enough, do not recognize their often unique position. They spend far too much in time, effort and money on benchmarking others, copying and mimicking best practice. This is often the easy route and eventually it can take you to commoditization but the case for opening up your thinking to new ways of service needs exploring more before many are really at todays point of being ‘trapped’. It is more the present fixed mental mindset than being already at the commodity trap.

He ‘hits’ the right area of focus in Service Innovation

I can accept all the arguments put forward in the book about service innovation and one could certainly add even a few more to support the business case. I agree throwing open your innovation thinking to engage with the customer as central is absolutely right but does this conceptual framework go deep enough in exploring this and explaining the consequences?

The Shift to catch more ‘open innovation’ winds.

Are Services the next natural step of open innovation or does this book simply float a balloon to gauge the existing and future winds and the ‘open movement’ is just catching the winds that already are in force? We are at risk that the lack of necessary detail within this book to support this fundamental framework will allow for more ‘hot air’ and expanding the gases that surround open innovation already?

In my view we should be tackling existing problems before we move on and introduce another layer of open complexity. It certainly will throw open the debate about how open can an organization become with its stakeholders and especially its customers.

Open questions abound

There are many, I mean many, open questions that Professor Chesbrough introduces that are within themselves significant concepts. These are for me, dealt with in a ‘light’ way and do not have the detailed examination I would expect.

Let me provide a couple of examples where there was a need of greater depth and structure to tackle these

1) The Customers Experience

Just engaging with customers to provide them with more complete experiences has a huge body of existing work behind that in its impact, strategic needs and what is required to do this correctly yet these are not really discussed in the difficulties, risks or rewards. A ‘complete experience’ is seemingly dangled there. Much is left to be investigated. Equally co-creating with customers as part of your development process is seismic in managing this sort of change at all levels of any organization.

This move to engage the customer and provide her with a complete experience is such a strategic decision, perhaps no different from opening up the R&D to outsiders, but I would have expected more on the problems this might entail for any debate the board and organizational will need to conduct to understand the implication for such a changes as this. The level of structural, process and relationship change this would bring is huge.

2) Understanding Tacit Knowledge

Another example where you really wanted more was the level of explanations around tacit knowledge. Tacit knowledge is very difficult to capture. I felt it was dealt with in a very light manner.

Professor Chesbrough is right, knowing more about your customers than anyone else does offer a potential strategic advantage, you can potentially get closer to tacit knowledge but is this for the few who can invest in this sort of information database (ie Amazon) or for the many that simply can’t make this type of database or research related investment?

Tacit knowledge of clients’ experiences is still a major challenge to capture and interpret but I certainly didn’t get as much help here in this book on how to go about it yet it is stressed that it is most important going forward for this framework.

One insight on tacit knowledge really worth sharing for our thinking.

There is one wonderful insight on this though, that I found excellent and must share- “the ability to manage tacit information effectively can create competitive advantage….as the globe moves ever faster…it is precisely the knowledge that doesn’t move fast –the tacit knowledge- that becomes increasingly valuable”. I loved that observation.

The risk of non-adoption in organization is higher when you lack the necessary detail.

The success of this book will be in its adoption; the taking up of this conceptual thinking and how it prompts ‘reactions’ and seen by different organizations that are facing service challenges, for it to resonate with them. Will “Open Service Innovation” be recognised as essential to adopt for the required growth and improvement needed to stay competitive will determine whether this book has the same impact as his first one, “Open Innovation”?

It will be a tough sell to this opening up of services to C-Level executives for many, that I’m sure, it will be difficult on just this book ‘s conceptual approach and limited guidance.

For better understanding of what makes up service innovation we need to fill in far too many gaps at present. I’m hopeful that the forthcoming book of Henry Chesbrough: “Open Services Innovation: Rethinking your Business to Grow and Compete in a New Era”, published by Jossey-Bass and being launching officially next week, 18th January 2011, will go some of the way to be a lightning rod to bringing this up in many people’s agenda, if it is not already! I felt with his past books on Open Innovation and Open Business Innovation they were the catalysts for deeper thinking. He provided the stimulus to find better answers with his many reflections and case studies through his solid research work and his ‘open’ and questioning thinking to prompt community ‘reactions’. This galvanized significant innovation movements and this time hopefully, it will be to open up and manage service innovation more effectively.

I will be completing a book review on this latest open innovation thinking by Dr.Chesbrough for www.innovationmanagement.se as an early February publication and I’m certainly looking forward to reading the final edition of this book when it arrives. I’ve glance through different early teasers, complimentary pages and seen some advances to raise my expectations on this but understanding service innovation has been poorly understood and documented to date. It is a complex and needs some different perspectives and thinking.

Dealing with the service side of innovation seems to have always been tricky. As the more ‘advanced’ economies or the ‘developed’ world extracts knowledge, its future understanding and extraction seems tied to really understanding and delivering service. Increasingly goods being produced is flowing east, service experience and delivery will not be far behind unless this becomes the critical focus of Western countries to master and own for the next few years.

I’ve read a significant amount about the subject of service innovation, often it is been very fragmented and poorly connected in many different lacking ways; in its empirical evidence, analytical and theoretical frameworks and laying out a cohesive design. Let us hope Dr. Chesbrough’s book gives us a more solid basis to build upon and extend out.

For me we have different focal points within service that need to be thought through some more, these are

Centred on People- how we set about consumer services for example, how we enable engagement and develop these connections to build a sustaining business around individual’s needs is critical to understand

Centred on Business- again what connects the parties into a service relationship and what ‘transforms’ from this dialogue and set of exchanges into something that gives value to all the participators and builds on the existing to transform it into something of new worth.

Centred on Products- where design becomes more critical to gain appeal and attention but then how to build from this ‘sale’ to operate, maintain and grow further services around these products sold

Centred on Information- the creation of knowledge and them being able to adapt it, leverage its utilization and diffuse it in new and valuable ways.

All of the above four require different understanding, a different science of service. All have a very high social- organizational need; all are lending themselves to being opened up.

An urgent ‘call to action’

We do need an urgent’ call to action’, we need a science of services to understand how this needs to evolve, what the different types of service focus requires look, how the service systems should evolve and scale.

The call to action does need to be a concerted effort-

a) it needs to take increasing Governments attention to remove barriers and promote service,

b) it needs businesses to give the necessary ‘weight of emphasis’ service deserves as service relevance to the organization is increasingly faster than producing products and this call to refocus internal resources needs to be recognised;

c) academics need to make service an increased priority for studies, for educational productivity and providing the platforms for research understanding and

d) Societal impact needs a better service understanding.

Also knowing how to measure service is another big challenge.

Then we need to improve our level of measures for service. The growing need for measuring networks, interactions and relationships is extremely relevant to this area of innovation. Also the ability to measure operations and delivery excellence and thirdly the service value chain, the partnerships needed and the service excellence points understood from the client/ final consumer’s point of view.

There are seemingly many challenges and unknowns for service innovation today. We do need to get systematic about service innovation and make it more of a dynamic evolution.

Optimism and openness to fresh insight is indeed needed

I hope Dr. Henry Chesbrough’s book is the catalyst for this. Like his 2003 book, Open Innovation, it kicked off a whole new way to manage outside those internal organisational borders, let’s hope he ignites the open touch paper again in this book for service innovation. A further work of his around the importance of the Business model is very much in the present minds of many and some excellent frameworks are presently help us in thinking these through like Alex Osterwalder’s Business model generation and its nine exploring blocks, or Mark Johnson’s and his four-box business model framework. Both of these you will find comments within this blog or the book reviews I have previously made for www.innovationmanagement.se.

We really need a better acceleration of service innovation and its greater understanding for regaining growth in the Western economies and if it is throwing services open then let’s go! I think service innovation is going to be very topical, highly critical in the coming months and years to grasp, tranlate and perform as we need service excellence to thrive and in the West, survive from service’s increased contribution in wealth formation to the economies and its role in necessary job creation.

Putting the word social into our innovation thinking is going to be a really important thing to do in the coming year, if you haven’t already. It will dominate our actions increasingly.

The challenges of ‘social’ is everywhere; within organizations, in all sorts of collective movements, in politics, across government, society, markets, academic institutions and effecting our personal lives in a host of ways.

Society has to face up to some really tough challenges and only innovation can solve these with human beings inventiveness and ingenuity. Regretfully we have still an accelerating ‘creative destruction’ and we are often more Schumpeterian than ever. Something has got to give and it will be within the broad social domain where it will all come together, many social things are converging or feeding off each other. Let’s take a brief look at all this social orientation going on.

Social engineering- we are seeing better motivation techniques to improve the work space, the communication tools and provide better access to knowledge. The increasing social role within the workspace is going to be essential for that sense of belonging and identification, when we are faced with diminishing workforces in the future

Social belonging needs- in Maslow’s hierarchy of needs social belonging is seen as important. We need to encourage more ‘touch downs’ and connections within our daily work, to provide an increased sense of belonging we need to encourage leaders to hold more impromptu meetings, encourage more spontaneous interactions and discussions to extract the knowledge within individuals, our organization and in more open ways externally to the enterprise. We are all ‘gaining our personal voice’ in so many different ways we need to provide a more social environment.

Social unmet needs- we need to look more to overcome the multiple challenges of 1) increasing physical needs and reducing resources, 2) tackle the constraints on future skills and capabilities, 3) provide different ways to offer care and advice, and 4) solve the growing psychic pressures many seem to be having to solve their personal issues. There are many intractable problems out there in society that we have to come to grips with and offer new more innovative solutions.

Social economy- we are seeing the mechanisms of the social economy breaking down and the different institutions and organizations are going to be under even more severe pressure with cost cuts. Often the boundaries there were clear in the past are becoming blurred and we have to tackle these with more social innovations. There is an increasing need to redraw a growing complex set of relationships and establish the different, distinct approaches required by innovation to understand, leverage and extract more from these groups involved for more social needs and aspirations of individuals within communities.

Social transformations are happening all around us. The very structures and institutions are under increasing strain and in some cases simply collapsing. There are new paradigms that we need to understand and translate, for instance the massive shift taking place from ‘push-through’ to ‘pull-through’ and the requirement of the individual not just serving the mass. There is intense ‘tensions’ for wider change and many organizations are failing to keep up or not being bold or radical enough to embrace and innovate in these changing times

Social innovation is growing in its discipline, its identity and understanding its tasks. Social innovation has to tackle the problems of increasing epidemics, flooding, pollution, healthcare costs, waste, inadequate welfare programmes and a widening inequality within society. We have to construct solutions around 1) structures and mechanisms to develop and diffuse quickly and effectively, 2) establish the process of social innovation to extend it beyond business or its philanthropy roots to extend it and spread it and in so doing bypass many restrictions and current barriers left in place from a rapidly older order of society and 3) productive systems to learn who can do what, when, where, how and with whom and scale it accordingly.

Social entrepreneurship- presently there are prescriptive theories on this as it is only emerging as a discipline in its own right in recent years and research tends to lag. What goes on today is social entrepreneurs blend methods from business and philanthropy to deliver what is needed in their challenge. This needs more understanding to allow for greater ‘replication’. The need of the social entrepreneur is to create social value but we need to define this a little more in the coming period.

Social value chains really do need to have an increased focus to understand in design, scale, the critical value-adding points, the ability or inability to scale understanding and in the service criteria. Some years ago the value chain become a focus of business with the result seeing a dramatic productivity improvement in results and we need the same amount of dedicated focus on the social value chain and what are good and improved outcomes along it from these efforts.

Social enterprises. The need to organize and deliver in complex situations of crisis requires very different thinking and adaption than in the norm. Understanding how one social enterprise is successful and more importantly evaluating if its processes, structures and organisation can be scalable is a real skill. Too often good social endeavours successful in one place cannot be duplicated so easiliy in another. We need to understand the why more. What are the conditions need that we can learn from, replicate and be extracted and what can’t be duplicated or scaled as recognized and left where they are. Understanding what and how to manage social innovate differently for different situations will make a real difference so the learning ‘adapts’ more to the often unique conditions found and in the process we can reduce sometimes some expensive mistakes from just blindly copying and ignoring these variables. As social enterprises continue to learn, innovation will be more prevelant.

Social responsibility within our organizations. Taking our social resonsibility seriuously has become increasingly important in recent years to. We need to be more transparent, more willing to engage society and the different interested groups. Increased emphasis is being placed on higher standards of practice, environmental sustainability, growing compliance with national laws and relevant conventions and sustainability for the better of society. There is certainly a greater sense of sharing the value more equally with societies by many larger organizations and addressing the ‘possible’ higher costs of complying with this is leading to many, often, imaginative innovative approaches. Much more has to be done but social responsibility is on most agenda’s of business, government and institutions and part of the internal innovation process more and more within organizations.

Social media- this has been one of the hottest subject in recent years. How different social platforms are connecting people to the information they want to see and use. We all need clear social media strategies, organizations, governments, communities and individuals. Social media can become the real ‘glue’ for bringing together innovation as it ‘sticks the incompletes together’ into new forms and things. Blogging, twitter, LinkedIn, Facebook and the host of other social tools bring us ‘content’ as never before. We need a plan to market this content and understand its value. This social aspect offers some exciting times ahead.

Social networking is something we are all being encouraged to do, to get involved in. Third party social networks are opening up to knowledge that was left ‘alone’ in the past. Engaging in social networks is offering us so many multiple choices of different ways to operate and respond. Social networking can increase awareness, improve traffic to and from your site, prompt trails, stimulate new service offerings, engage broader audiences than in the past, enable you to design, test, drive your business, can prompt repeats, referrals and improve retention. Social networks now drive innovation and provide a powerful notification tool of the work you are doing.

Social is critical to build into our everyday thinking. It can amplify everything, it can offer dynamic experiences, it can deliver faster than ever and we need to increasingly interact all the time. We are really getting very social in different, more interesting and innovative ways.

Our new social consciousness can embed and diffuse innovation, it can fuel a more cumulative dynamic effect and empower larger groups with more confidence to master innovation understanding.

One final point- authenticity will rule in our social environment otherwise you will be quickly outcast from your social group.